In a recently published report KPMG identified that ‘……..becoming Customer centric for retailers was just about the only remaining survival strategy’ – whether that’s actually true or not is the subject of much debate, but what is indisputably clear is that those who don’t even consider it may not be around to reap the benefits.
The first step in becoming customer-centric as an organisation is to adopt a customer-based philosophy, this is typically centred around ensuring the businesses desired outcomes are aligned to customer outcomes. Typically this starts at the top – which is why top-level support for the programme is essential – however in some organisations its often individual teams who by their actions develop customer centric activities into their daily roles.
It is sometimes hard to gauge how well a customer centric philosophy is being adopted and followed across the organisation. As a consequence measures are often put in place to help reinforce the correct behaviour and ensure the business remains on track. These will ultimately ensure consistency and avoid some of the challenges that often come from ever competing priorities, or the temptation to move onto the latest ‘new shiny idea’
KPIs (Key performance Indicators) or OKRs (Objectives and Key results) are often used to align behaviour with agreed goals. However, they are often created in siloed isolation, rarely are they designed from a holistic perspective. This often means they do not work harmoniously and can conflict, thus creating internal tensions.
One key aspect of KPIs/OKR’d are that they need an owner in order to have the desired impact – in each case this is someone who takes responsibility, rather than multiple people sharing ownership which ends in confusion. Businesses where everyone owns the eCommerce revenue KPI effectively means no-one owns it.
Across the customer/ digital commerce space the following are common in the retail/brand/digital space:
- Traffic/ Visits/ Footfall
- Conversion Rate (CR)
- Average Order Value (AOV)
- Returns Rate (RR)
- Return on Ad Spend (ROAS)
However, in our view these business outcomes are often not controllable by the teams who answer to these KPIs.
For example, a Website Conversion Rate is an output of a process rather than a business lever in its own right. Levers to affect CR are manifold: Usability, pricing, availability, store location & traffic quality are all drivers; yet many are normally outwith the control of the person owning the CR KPI. If you give someone a CR KPI, the easiest way for someone to improve their performance is to turn off all advertising so that only repeat customers visit the site. this would achieve the perceived target but not the ‘real goal’
Across the leadership team, there are KPIs that should be used to align the organisation with customer outcomes
- Brand awareness
- Brand sentiment
- Customer Lifetime Value (CLV)
- Customer retention %
- Average/worst Resolution time
- First Call Resolution (FCR)
- Website page speed (increasingly important for google rankings)
- Customer Effort Score (CES) or Net Promoter Score (NPS)
- Employee satisfaction
- Sales attributed to Customers by postcode rather than channel (ie a total customer or omnichannel approach)
- Loyalty or communications enrollment and lapse rate
- Time from order placed to shipped – for each delivery service
- weighted page availability % or stock measure of fragmentation
- Lost customers or customer who will lapse within 3 months
- Error page views
- Checkout completion and disengaged rate.
The list above is not exhaustive and your version needs to be developed with both your senior management and employees to ensure it results in the best outcomes for customers. If your organisation adopts a progressive customer centric approach then one of the key tasks of senior management will be to constantly question the current, and develop further KPI’s which support the evolving cause; no simple static set will suffice if you believe that developing enduring levels is vital.
In some case you may need to work with a trusted advisor (like Prospero) to provide an independent viewpoint and to accelerate both the identification and adoption of the right ones for you.
If we can help you – please don’t hesitate to call for a free consultation.